Cbus takes initiative

As the superannuation industry prepares to move into a new reform regime, industry funds have shown signs of stirring in response to pressure for more disclosure and transparency in their reporting.

The moves so far have been minimal but the $17 billion building industry fund Cbus has posted its 2011 annual report on its website and unveiled what chairman, former Victorian premier Steve Bracks, calls a vast expansion of information for members and stakeholders.

Chief executive
David Atkin
says Cbus felt it was at the stage when it should be talking more to its members and other stakeholders. The result is a three-fold increase in the size of the report, from 16 pages to 52.

There has been lively debate about the disclosure policies of all super funds during the review by Jeremy Cooper’s panel and a large part of that review’s recommendations were adopted by the government last week. Many of the suggested reforms on reporting and disclosure standards in the Stronger Super report have been largely noted by the government and given support without any firm indication of the new rules or their timing.

The industry fund umbrella group, the Australian Institute of Superannuation Trustees, earlier this year unveiled a governance framework which it has since adapted to cover all types of fund.

AIST chief executive
Fiona Reynolds
says this has now been presented to the Australian Prudential Regulation Authority as a model for an industry code and industry consultation has begun on this.

While the spotlight has been on industry super funds, it should not be forgotten that other commercial or retail funds generally appear to have been less forthcoming with details in annual reports.

The view in the super industry is realistic: as is the case for the thousands of listed company annual reports, only a small percentage of stakeholders actually read the reports. But the public mood has been changing. At an industry gathering recently, Russell Mason, a global partner with consulting firm Mercer, said that, whether super funds were corporate, commercial, retail or not for profit, they controlled billions of dollars and as a result “should be subject to the same governance as a publicly listed company".

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A quick survey of large industry funds’ websites shows a very limited disclosure regime and only a few major funds show the remuneration of directors.

AustralianSuper, the largest industry fund, plans to add a website link to its complete audited accounts next month which will disclose directors’ and management remuneration, chief executive
Ian Silk
says.

Atkin says Cbus moved on its report so it could get ahead of what might be required later by the government. In addition, he says the superannuation industry has been pushing a corporate governance agenda on listed companies in its portfolios.

“Why shouldn’t we match that?" he says.

As a result, the Cbus report lists the remuneration of trustee directors and senior executives in the same way as public companies. The top two directors were paid $90,000 to $99,000 and total directors’ remuneration was $906,382, down slightly on 2010. Cbus has broken ground with its listed remuneration of nine major executives who shared a total of $2.33 million in 2011, with two earning $350,000 and above.

The fund has spelt out its code of conduct, including conflict of interest, and says Cbus directors and staff cannot solicit monetary gifts and must register other gifts on a register (above $100 for directors and $50 for staff).

Apart from reporting the returns from its various investment options – fairly standard disclosure by funds – Cbus also has detailed its investment management costs showing how it arrives at the final crediting rate to members.

Atkin says Cbus has a young membership (average age 37), reflected in a high 93 per cent of its 661,000 members in the default investment strategy which is more than 55 per cent in shares and almost 22 per cent in property.